Iran and Azerbaijan Argue Over Caspian's Riches

By DOUGLAS FRANTZ

Published: August 30, 2001

BAKU, Azerbaijan, Aug. 25—
For a leader as proud as President Heydar Aliyev of Azerbaijan, it came as something of a humiliation when an Iranian warship ordered an Azerbaijan research vessel to stop exploring for oil in the Caspian Sea last month.

The unarmed vessel, the Geofizik-3, was leased by the Azerbaijan government to the oil giant BP to explore a promising field in waters generally regarded as belonging to Azerbaijan. But when the Iranians trained their guns on the ship on July 23 and two warplanes buzzed it, the only option was to retreat.

If Azerbaijan were just another small country, the incident would scarcely have made a ripple in the outside world. But, from his seat atop many billions of barrels of oil and large natural gas reserves, Mr. Aliyev leans to the West. So his allies began to worry that Iran might block development of some of those resources and upset the fragile balance in the region.

Initially tepid allied responses grew tougher. The United States called the Iranian action provocative and neighboring Turkey dispatched a squadron of fighter jets to Baku for an air show that left Azerbaijanis craning their necks skyward and pumping their fists.

By threatening military force, Iran focused new attention on the simmering dispute over how to carve up the resources of the Caspian among the five nations bordering the inland sea -- Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. The Iranians are arguing for a greater share than the former Soviet republics are willing to give.

The outcome will not only affect the border nations. It will also help determine the role played by Western governments and companies in developing and transporting as much as 200 billion barrels of oil and 600 billion cubic meters of gas estimated to be in the Caspian.

The disagreement over dividing the sea reflects larger tensions in the energy-rich Caspian region, where Russia, Iran and the West are vying for influence with the small countries of the Caucasus and Central Asia. While Russia has recently adopted a more conciliatory attitude toward Azerbaijan and the role of Western oil companies, Iran has taken a more hostile stance.

''This incident was not about oil,'' said a senior Western diplomat in Baku. ''It was about Iran protecting its interests in the Caspian Sea, and Iran's interests conflict with those of other countries.''

For the Bush administration, the Iranian threat to use military force and the broader battle for influence in the region raises important energy and security issues. The administration has pushed to bring Caspian oil and gas to Western markets to increase world supplies and improve regional stability.

''Beyond the energy resources of the Caspian, the region offers the United States a chance to advance its aims to improve relations with the Muslim world and develop more open governments,'' Brenda Shaffer, the research director of Harvard University's Caspian studies program, said in a recent interview.

Not surprisingly, the threat is seen as more immediate and grave in the corridors of Mr. Aliyev's executive office building. Elements of the Azerbaijan government are concerned that Iran's actions were part of a continuing effort to destabilize Azerbaijan, which once was a province of Iran and has long been suspicious of its Islamic southern neighbor.

''If Azerbaijan is a rich and independent country, that is a big threat to Iran,'' Novruz I. Mammadov, head of Mr. Aliyev's foreign relations department, said in an interview. ''Iran is trying many ways to stop our development.''

Mr. Mammadov said Azerbaijan intelligence had evidence that the Iranian secret service was spending millions of dollars to support pro-Iranian religious leaders and politicians in Azerbaijan. He said that Iran had paid for the construction of 1,400 mosques in the country and that mosque leaders paid people to support Tehran.

''Iranian representatives tell me, 'Why are you cooperating with the United States? They are our enemies,' '' Mr. Mammadov said. ''Iran demands that the Caspian is only for the five states, not Western companies or governments.''

The concerns were repeated by Araz Azimov, Azerbaijan's deputy foreign minister. Mr. Azimov said Iran had raised the stakes in the Caspian by introducing the threat of violence. ''They put a finger on the map and said, 'This is my part,' '' he said. ''It set a bad precedent.''

The boundaries of the Caspian have been in dispute since the collapse of the Soviet Union. Treaties gave Iran about 12 percent of the sea and set out rules for shipping and fishing. But the treaties left open the issue of oil and gas development.

Iran is demanding 20 percent of the surface and seabed, including substantial areas belonging to Azerbaijan. While the potential oil and gas in the those areas is only a fraction of Iran's huge reserves, Tehran opposes any division of the Caspian that would reduce its influence.

On July 23, the Geofizik-3 and a supply ship were on the second day of a planned five-week voyage to conduct research in the Alov field, which lies 60 miles north of what are regarded as Iranian waters but within the zone claimed by Tehran.